Gourdon, Julien (2006): Explaining Trade Flows: Traditional and New Determinants of Trade Patterns.
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An empirical tradition in international trade seeks to establish whether the predictions of factor abundance theory match with the data. The relation between factor endowments and trade in goods (commodity version of Hecksher-Ohlin) provide mildly encouraging empirical results. But in the analysis of factor service trade and factor endowments (factor content version of HO), the results show that it performs poorly and reject strict HOV models in favor of modifications that allow for technology differences, consumer’s preferences differences, increasing returns to scale or cost of trade. In this paper we test if these “new” determinants help us to improve our estimation of trade patterns in commodities. Since the commodity version allows obtaining a large panel data we also compare two periods, pre and post 1980. We use a Heckman procedure to allow for non linearity in the relation between factors endowments and net exports and between trade intensity and net exports. The results show that adding the “new” determinants of factor content studies help us to improve the prediction of being specialized in the different manufactured products. However specialization according to factor endowments is stronger than ever, especially concerning the specialization according to human capital endowment. Trade patterns are also determined by trade intensity. Here differences in technology, trade policy, transport and transaction costs, explain the difference in trade intensity.
|Item Type:||MPRA Paper|
|Original Title:||Explaining Trade Flows: Traditional and New Determinants of Trade Patterns|
|Keywords:||JEL Classification: F11; F14; F2 Keywords: International Trade; Hecksher-Ohlin Model|
|Subjects:||F - International Economics > F2 - International Factor Movements and International Business
F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade
F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade
|Depositing User:||Julien Gourdon|
|Date Deposited:||20. Jul 2007|
|Last Modified:||21. Feb 2013 02:15|
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- Explaining Trade Flows: Traditional and New Determinants of Trade Patterns. (deposited 20. Jul 2007) [Currently Displayed]